Smarter strategy

Published: Thursday, April 4, 2013 at 08:00 AM.

But by the end of the year, RedPine’s Bay County office was closed, and only five of a promised 44 jobs for 2011 had materialized. Since then, the company has been dissolved and the county and state have been suing to recover the taxpayers’ money.

The county (and the state) made two grave errors: They failed to do their due diligence on Redpine and its weak financials, and they gave the company cash upfront before a single job materialized.

The iSirona deal reflects the necessary changes made in the wake of the Redpine debacle.

First, it’s a local company that officials are familiar with. It has a proven record of success. That’s a better risk than some outsider starting virtually from scratch. In addition, the EDA has instituted a vetting committee to review financials before a proposed deal goes to the commission.

Second, iSirona has to earn the incentives based on performance. Wade said the company first must create the jobs and maintain them for at least a year. And then only one-third of the incentives would be paid out initially, with the other payments stretched out over four years, minimum.

The county’s approval of the incentive package is no guarantee that iSirona will stay, only that Bay remains in contention. But if the company chooses Bay, the taxpayers are in a stronger position and better protected than they were two years ago.

Tax breaks, subsidies and other publicly funded “incentives” offered to private businesses in hopes they will relocate or expand in a certain area are a form of economic alchemy. Their success rate is spotty, and too often the deals are cloaked in secrecy.

However, it’s also a game that everyone plays, from the federal to the municipal levels. The key is to play it smartly, which like any game includes not repeating your mistakes.

Bay County appears to have learned from its biggest blunder.

County commissioners on Tuesday voted unanimously to approve $360,000 in incentives for iSirona, a local medical software company, to keep it here and to add 300 full-time jobs to its existing workforce of 117. The money serves as a 20 percent county match on a total $1.8 million incentive package funded jointly by Florida’s Department of Economic Opportunity (DEO) and the county. It’s part of the state’s Qualified Target Industry Tax Refund program.

Although iSirona was founded in 2008 in Panama City, it recently gained a new majority investor, Dr. Patrick Soon-Shiong from Los Angeles, who is folding some of his other companies into iSirona. The company wants to expand, but the question is where that will occur. Neal Wade, the executive director of the Bay County Economic Development Alliance, said the county is competing against communities in three other states to have iSirona.

When the county gambled on incentives in 2011, it lost its shirt.

Back then, state and local economic development officials pressured the County Commission to approve giving $350,000 upfront to Redpine Health Care Technologies Inc., a medical billing software company. The state provided an additional $400,000 in cash. In exchange, Redpine was supposed to relocate its headquarters from Spokane, Wash., to Bay County and create 410 jobs.

But by the end of the year, RedPine’s Bay County office was closed, and only five of a promised 44 jobs for 2011 had materialized. Since then, the company has been dissolved and the county and state have been suing to recover the taxpayers’ money.

The county (and the state) made two grave errors: They failed to do their due diligence on Redpine and its weak financials, and they gave the company cash upfront before a single job materialized.

The iSirona deal reflects the necessary changes made in the wake of the Redpine debacle.

First, it’s a local company that officials are familiar with. It has a proven record of success. That’s a better risk than some outsider starting virtually from scratch. In addition, the EDA has instituted a vetting committee to review financials before a proposed deal goes to the commission.

Second, iSirona has to earn the incentives based on performance. Wade said the company first must create the jobs and maintain them for at least a year. And then only one-third of the incentives would be paid out initially, with the other payments stretched out over four years, minimum.

The county’s approval of the incentive package is no guarantee that iSirona will stay, only that Bay remains in contention. But if the company chooses Bay, the taxpayers are in a stronger position and better protected than they were two years ago.

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